Assuming you only have 500 yuan to invest each month, should you buy individual stocks or invest in a basket of stocks or funds through a regular investment plan?
The Singapore Exchange (SGX) is about to lower the minimum trading lot for stocks priced over 10 yuan from 100 shares to 10 shares, significantly reducing the entry barrier.
In fact, similar practices are quite common overseas. The U.S. stock market has many &#34;expensive stocks,&#34; with 19 stocks priced over 1,000 dollars (approximately 1,270 Singapore dollars). The most expensive is Warren Buffett's Berkshire Hathaway, with a share value close to 730,000 dollars, followed by the U.S. residential construction company NVR, with a share price of over 7,700 dollars.
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The most expensive U.S. stock is Warren Buffett's Berkshire Hathaway. The picture shows Buffett attending the company's shareholder meeting in 2024. (Reuters)
<h3>U.S. Stocks Offer &#34;One Share Trading&#34; and Fractional Share Services</h3>
Therefore, U.S. stocks not only offer &#34;one share trading,&#34; but brokers and investment platforms also provide fractional shares services, allowing investors to hold a portion of high-priced stocks for just a few dozen dollars, such as buying 0.1 shares of Nvidia.
In addition to small investments in individual stocks or fractional shares, several brokers and investment platforms also offer regular investment services, allowing you to choose to buy individual stocks or several stocks, invest in funds or exchange-traded funds (ETFs), or create a portfolio of multiple funds.
<h3>Small Investments in Individual Stocks Provide Strong Engagement but Don't Overlook Transaction Fees and Risks</h3>
Li Huijing, head of investment management at financial advisory firm MoneyOwl, pointed out in an interview with Lianhe Zaobao that small investments in individual stocks or fractional shares can indeed be valuable for beginners.
She said that this allows investors to personally experience market fluctuations, emotional ups and downs, and decision-making pressure in a relatively controlled risk environment, helping to build a basic understanding of investing and preventing heavy losses from a single mistake
However, she also reminded: &#34;A small amount does not mean low risk.&#34;
The transaction costs of small investments are often underestimated. Whether it's the minimum commission, platform fees, or the bid-ask spread, these fixed or semi-fixed costs can significantly erode returns. If investors frequently enter and exit the market, even if their directional judgment is correct, the actual returns they ultimately receive may not meet expectations.
Traditional brokerage accounts have a minimum commission, such as 25 yuan. Buying 500 yuan worth of stocks incurs a commission that is equivalent to 5% of the investment amount, which can significantly erode the return rate. Online trading platforms or brokerage custodial accounts have lower fees, often less than 1%, and may even offer commission-free trading.
Additionally, Li Huijing mentioned that fractional shareholders may not enjoy the same voting rights or benefits as whole shareholders, liquidity may also be lower, and they may not be able to obtain the same price as whole shares. The execution time for trades may be longer, and when the market changes rapidly, the flexibility to adjust investments is limited. For example, if one buys fractional shares instead of Berkshire Hathaway at 730,000 dollars per share, they cannot attend the shareholder meeting for free.
When funds are limited, it is often difficult to diversify the investment portfolio. If one only has 500 yuan per month and concentrates on buying one or two stocks in the short term, any negative news at the company or industry level can have a relatively obvious impact on the overall assets.
<h3>&#34;Not much money&#34; is not a reason to ignore discipline</h3>
Gidon Jerome Kessel, head of deposits and wealth management at UOB, reminded that beginners often fall into the trap of underestimating risk management when investing in small or fractional shares.
He said that many investors, due to the small amount invested, easily develop a mindset of &#34;it doesn't matter if I lose,&#34; treating investment as a game of chasing hot topics or short-term news. This often weakens investment discipline, leading to overtrading and neglecting fundamentals.
He pointed out that even with fractional shares or small investments, basic principles should still be followed, including understanding the business and financial situation of the companies being invested in, avoiding excessive concentration in a single industry or theme, and planning in advance when to take profits and when to cut losses.
&#34;What really needs to be vigilant is not the size of a single investment amount, but whether the correct risk awareness and long-term thinking have been established.&#34;
Compared to selecting individual stocks, a Regular Investment Scheme emphasizes long-term investment and discipline.
By investing a fixed amount each month, investors can maintain their investments under different market conditions, averaging costs amid price fluctuations. This helps reduce timing pressure and avoids making emotional decisions due to short-term volatility.
<h4>Further Reading</h4>
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Tiger Brokers Singapore market strategist Huang Jiaran pointed out that regular investment plans are particularly suitable for busy investors or those who do not wish to spend time researching individual stocks.
He said that many plans cover multiple stocks or ETFs, allowing investors to achieve a certain level of diversification and reduce the volatility risk brought by a single stock or market. In Singapore, some regular investment products also tend to allocate to dividend stocks or indices, helping investors obtain a more stable cash flow.
However, he reminded that regular investment plans are not &#34;set it and forget it.&#34; Since the products are usually determined by the platform or fund manager regarding the investment scope, the flexibility is relatively limited. If income conditions, risk tolerance, or financial goals change, it is still necessary to review them regularly.
Huang Jiaran suggested that young investors start investing as early as possible to fully utilize the compounding effect. In terms of asset allocation, they can combine high-volatility markets like the United States, Hong Kong, or mainland China with Singapore stocks. The Singapore stock market is known for its resilience, dividends, and regulatory stability, providing defensive and income attributes in a global environment of uncertainty and interest rate changes.
If investing by selecting stocks, Li Huijing reminded investors to honestly and comprehensively assess their investment performance, rather than just celebrating a few successful stock picks. The reality is that most people cannot consistently outperform the market, especially considering the opportunity cost of idle funds while waiting to invest.
She suggested a compromise strategy of an 80-20 allocation, investing 80% of funds into globally diversified funds through regular investments, while the remaining 20% can be allocated to individual stocks or ETFs based on personal judgment.
For young people, stock picking may be more fun. Kessler said it is better to choose boring but good performers rather than exciting but poor return rates. &#34;High-risk, high-reward investments may occasionally yield impressive results, but they can also lead to severe and irreparable capital losses.&#34;
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<h3>More companies and platforms are launching small and regular investment services</h3>
In the past two years, the stock market has been active, and more companies and platforms have introduced lower-threshold investment services.
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Multiple brokerages and investment platforms offer the ability to invest in fractional shares of U.S. stocks for as low as $1. (File photo)
Digital bank Youxin Bank (Trust Bank) launched trading services for investing in the U.S. market at the end of last year, allowing fractional share trading with a minimum investment of $10 (approximately SGD 12.7), and will not charge commissions until mid-2026.
Others offering minimum investments of $1 in fractional shares of U.S. stocks include Interactive Brokers, Tiger Brokers, Syfe, and Phillip Securities. Moomoo and DBS Vickers, a subsidiary of DBS Group, require a minimum investment of $5 for fractional shares.
Most of their trading fees are around $1 per transaction, with DBS Vickers offering a promotion of zero commission for trading fractional shares of U.S. stocks until March 31, originally priced at $0.96 per transaction.
Saxo Bank recently launched the AutoInvest regular investment service. Investors can select up to 10 ETFs from over 100 options to include in their portfolio and set a monthly investment amount. Saxo states that this helps investors continuously participate in the market, and they can modify, pause, or terminate the plan at any time.
Several financial institutions have already provided regular investment services. OCBC Bank's Blue Chip Investment Plan allows for a minimum monthly investment of SGD 100 to invest in 21 Singapore blue-chip stocks and ETFs listed on the Singapore Exchange. It should be noted that the buying and selling fees are 0.3% of the transaction amount, with a minimum of SGD 5 per share. If investing SGD 100 monthly in two stocks, the fees can reach SGD 10, making it unsuitable for small investments. OCBC offers promotions for new customers under 30, with a flat fee of SGD 0.88 for transactions below SGD 500.
DBS Bank's Invest-Saver allows beginners to invest SGD 100 monthly in smart investment portfolios, ETFs, and unit trusts, with transaction fees ranging from 0.50% to 0.82% of the transaction amount
The Share Builders Plan by Phillip Capital allows investment in over 70 stocks and ETFs, with an annual fee of 0.3% of the total portfolio, with a minimum of 1 SGD.
FSMOne's regular investment plan starts at a minimum of 50 SGD for ETF investments, allowing selection from 302 ETFs. The platform does not charge fees, but there are transaction fees.
Platforms like Endowus and StashAway offer both regular investments in individual funds and regular investments in portfolios, primarily charging based on assets under management. StashAway's ETF regular investment only charges a fee of 1 SGD at the time of buying and selling, without charging based on assets under management.
<h3>&#34;Financial Tips&#34; Invites Readers to Write In</h3>
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The Singapore Exchange plans to lower the minimum trading lot for stocks priced over SGD 10 from 100 shares to 10 shares, reducing the investment threshold. For investors who can only invest SGD 500 per month, choosing individual stocks or a regular investment plan becomes crucial. The US stock market also offers fractional shares services, allowing investors to hold partial rights to high-priced stocks with small amounts of money. Financial advisors point out that small investments in individual stocks provide a strong sense of participation, but attention must be paid to transaction costs and risks

Financial Tips: Invest 500 Yuan Monthly - Self-Selected Stocks or Regular Investment Plan? | Lianhe Zaobao